More than half of the state's new applications for food stamps and other welfare assistance are being submitted online, Indiana social services chief Michael Gargano told lawmakers Tuesday.

Fifty-nine percent of new clients this month have applied online rather than face-to-face at county welfare offices, the secretary of the Family and Social Services Administration said.

"More and more people are taking advantage of being able to submit applications online," he told the Medicaid Oversight Commission.

His comments appeared to note a remarkable turnaround from the automation problems that plagued FSSA's welfare modernization initiative until early last year. The agency has since made more face-to-face service available in counties that had received online services, document imaging and other automation that was designed to speed up the application process for food stamps, Medicaid and other public safety net benefits.

That dual system of automation and more face-to-face service, which FSSA dubbed the "hybrid" system, has been implemented in all but 20 of Indiana's counties, Gargano said. It's due to be implemented in 19 of the remaining counties by late October, pending federal approval, and is tentatively set for implementation in Marion County and Indianapolis in February, he said.

A key advocate for welfare clients said the online applications included some submitted by clients using computers in county welfare offices with the help of public and private case workers.

"We're happy there's still that human connection," said David Sklar, president of the Indiana Coalition for Human Services, a group of advocacy organizations.

Sklar said it was clear that a totally automated system, including statewide call centers, posed problems for some people seeking benefits, and that the hybrid system was filling some of the gaps for people needing help.

"We are cautiously optimistic. I think it's clear that things are moving in the right direction," Sklar said. "If this system is proven to work, that's fantastic and we're behind it 100 percent."

After problems including lost documents and lengthy call center hold times, Gov. Mitch Daniels fired Armonk, N.Y.-based IBM Corp. as the lead contractor on the automation project and created the hybrid system to restore the face-to-face contact. The agency rolled out the new system in southwestern Indiana in January 2010, and extended it to other parts of the state as it gained approval from the U.S. Food and Nutrition Service, which administers the food stamps program. The system was implemented in 13 northwestern and north central Indiana counties in June.

The 20 remaining counties are in central Indiana.

FSSA and IBM are suing each other over the canceled contract.

Gargano also presented lawmakers with data showing Indiana welfare rolls expanding to 1.3 million as of June 30, up 4 percent from a year earlier, and the hybrid system performing better than when the eligibility intake system was converting from the old, entirely face-to-face system to the automated system. He said applications are being processed more quickly, backlogs are dropping, and error rates are declining.

State Rep. Peggy Welch, D-Bloomington, said she knew "anecdotally that it's gotten better" because she's no longer hearing from constituents complaining that they've lost their benefits.

"I'm not getting the frantic phones calls," Welch said.

Sklar said Indiana should have more people enrolled for benefits, given the economic downtown and the number of people living in poverty. He said remaining processing errors, too little outreach by FSSA, frustration by clients in completing the application process, and other factors were holding enrollment rates down.

"We're still not where we should be," Sklar said.